Arnold Lodge Redevelopment Phase 3 Nottinghamshire Healthcare NHS Trust February 2013

84 Pages·2013·1.93 MB·English

by  Clayton Ann

Arnold Lodge

Cordelia Close
Leicester
LE5 0EL

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Full Business Case For:
Arnold Lodge Redevelopment Phase 3

Nottinghamshire Healthcare NHS Trust
February 2013
Document control sheet
Client Nottinghamshire Healthcare NHS Trust, Wells Road Centre
Document Title Full Business Case for Arnold Lodge Phase III
Version Issue: 2
Status Issue for Finance & Performance Committee
Author Sarah Johnson - Client Project Lead / Andy White - Project Manager
Date January 2013
Further copies from Capital Planning Unit
Document history
Version Date Author Comments
Draft 1.0 17th January 2013 Sarah Johnson Draft FBC
Andy White
Ann Clayton
Draft 2.0 22nd January 2013 Ann Clayton Updated with Mike Harris and Steve Geelan comments
Draft 3.0 28th January 2013 Ann Clayton Updated with Sarah Johnson comments Section 3, 4, & 5
Draft 4.0 31st January 2013 Ann Clayton Finance details available
Issue 1.0 1st February 2013 Ann Clayton Comments received and issue for F&P
Issue 2.0 14th February 2013 Ann Clayton Updated post F&P

Contact details
Main point of contacts Telephone number Email address
Sarah Johnson 0116 2077725 [email protected]
Andy White 0115 9691300 x 16283 [email protected]
Project Manager 07767 641477

Page 2 of 84
Contents

1 Executive Summary 5
2 Introduction, Project Overview & Deliverables 14
3 Strategic Context 16
4 Case of Need 31
5 Option Appraisal 39
6 Financial Analysis 54
7 Cost Benefit, Sensitivity and Choice of Preferred Option 63
8 Benefits Realisation 66
9 Statement of Preferred Option 68
10 Risk Analysis 69
11 Project Management 74
12 Post Project Evaluation 79
13 Appendices 82

Figures
Figure 1 - Project developments and bed capacity
Figure 2 - Current services provided by wards
Figure 3 - Model of Care
Figure 4 - Initial Non-Financial Appraisal based on SOC criteria
Figure 5 - Updated Non-Financial Appraisal based on Divisional Objectives
Figure 6 - Listed Options comparator
Figure 7 - General Arrangements of Listed Options
Figure 8 - Quality Graph
Figure 9 - Summary of bed capacity with Option 5
Figure 10 - Capital Costs
Figure 11 - Capital Expenditure Profile
Figure 12 - Initial Revenue Investment
Figure 13 - Incremental Capital Charges
Figure 14 - Investment and Contribution
Figure 15 - Impact on Arnold Lodge Medium Secure EBITDA and I&E Surplus margins
Figure 16 - Results of NPV Analysis
Figure 17 Incremental Financial Impact - Option 5
Figure 18 - Comparison of results of Non- Financial option Appraisal and Economic Analysis
Figure 19 - Risk Register
Figure 20 - Project Organogram
Figure 21 - Key Project Dates (Provisional)
Figure 22 - Procurement choices
Figure 23 - Comparison of Procurement Routes

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Glossary

BB Balfour Beatty
Capex Capital Expenditure
CPU Capital Planning Unit
CPMG Capital Planning & Monitoring Group
CRL Capital Resource Limit
DCP Development Control Plan
EBITDA Earnings Before Interest, Taxes, Depreciation, and Amortization
ELT Executive Leadership Team
F&P Finance & Performance Committee
FBC Full Business Case
FM Facilities Management
GMP Guaranteed Maximum Price
LTFM Long Term Financial Model
M&E Mechanical & Electrical
MHSOP Mental Health Services for Older People
OBC Outline Business Case
OJEU Official Journal of the European Union
P21+ ProCure21+
PSCP Principle Supply Chain Partner
PDC Public Dividend Capital
PPE Post Project Evaluation
PFI Private Finance Initiative
PMO Project Management Office
QIPP Quality, Innovation, Productivity, Prevention
SFBC Shortform Business Case
SOC Strategic Outline Case
ToR Terms of reference
VAT Value Added Tax
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1. Executive Summary

1.1 Introduction

1.1.1 This Full Business Case sets out proposals to carry out Phase 3 of the site development
which aims to redevelop and refurbish the wards within the original estate at Arnold Lodge
(with the exception of Cannock Ward). This phase was intentionally enabled by the building
of phase 2(Rutland Ward). This proposal is the last phase of a planned programme of works
at Arnold Lodge.

1.1.2 It sets out the arguments and evidence which will demonstrate the importance of further
development of Medium Secure Services at Arnold Lodge. The continuation and provision of
high quality Medium Secure Services is of considerable strategic importance to the Trust.

1.2 Drivers for change

1.2.1 The overarching principle objective in this Business Case is to improve the accommodation
for patients bringing it up to current standards through the facilitation of improved therapeutic
environments. This included increased ward floor area per patient, natural light, increasing
ceiling heights where possible to reduce the feeling of being overcrowded. This will increase
observation and engagement, patient autonomy, respect and privacy and minimising any
physical hazards. The case of need is focussed on the Male Mental Illness Care Stream and
the requirement to bring about improvements to this service. These proposed improvements
are at the core of the Integrated Business Plan and Clinical Strategy and are a key element in
Arnold Lodge‟s long term strategic objectives.

1.2.1 The project deliverables are:-

- Redeveloping the existing environment in the three oldest wards in the unit for
the Male Mental illness patient group consistent with the programme of works in
Phases 1 & 2;
- The introduction of a new model of care in the Male Mental Illness Care Stream;
- The more efficient deployment of nursing staff in the provision of direct clinical
care arising from the improved environment;
- Improving the existing space utilisation of ward area that is presently empty;

- To take cognisance and comply with the recommendations from environmental
audits and statutory inspections by regulatory bodies.

1.2.2 The successful scheme will facilitate increased space, improved physical, procedural and
relational security practices, improving safety for staff, visitors and patients, and the
introduction of a 3 step Model of Care, namely:-

- Acute Admission & Assessment
- High Dependency Treatment
- Low Dependency Care & Rehabilitation

1.2.3 The services provided at Arnold Lodge and bed numbers are detailed in the table below,
Fig A. It identifies the progression of bed numbers up to and including the end of Phase 2
(Rutland Ward). At the completion of Phase 2, patients transferred from Pennine to Rutland
Ward leaving the existing ward fallow. The capacity of the hospital stands at 108 beds, noting
that 16 of them are presently unusable. The capital charges on the fallow Pennine ward are
currently £106k per annum which is regarded as a sunk cost.
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Fig A. Project developments and bed capacity

Ward Patient Numbers Gender Service
Pennine 0 N/A Currently vacant after transfer of patients to Rutland Ward
Helvellyn 15 Male Mental Illness, Continuing Care and Rehabilitation
Snowdon 15 Male Mental Illness, Continuing Care and Rehabilitation
Rutland 16 Male Mental Illness, Acute Admission and Assessment
Cannock 12 Male Personality Disorder, Treatment / Continuing Care
Ridgeway 12 Male Personality Disorder, Treatment, Cont Care and Step-down
Tamar 12 Female Standard Medium Secure Service
Coniston 10 Female Women‟s Enhanced Medium Secure Service
Total 92

1.3 Case of Need

1.3.1 The case of need is to ensure that clinical care is of the highest standard and is delivered in
environments which reflect and enable this high standard to be maintained.

1.3.2 This approach is encompassed within the services Clinical Strategy and the Strategic
Intentions which are as follows:
To be the best that we can and better than our competitors;
Despite the financial challenges, to provide quality care which is
directed by strong clinical leadership that is confident, visible and
collaborative;
To have an eye on the future and plan for any changes in the way the
service may be financed;
In an environment of competition, to be business focussed as well as
patient focussed;
To be equally accountable to those who commission the service as well
as those who use it.

1.3.3 The Case of Need is predicated on 3 primary elements:

Environment - The need to provide services in buildings which are fit for
purpose, enabling care to be delivered in a therapeutic environment which
also ensures the safety of both patients and staff. This environment should
maximise natural light, space and access to fresh air, therapeutically
stimulating and optimising the potential for recovery
Model of Care - The need to provide a clinical service and model of care
which reflects the presenting needs of the patient group and offers the
opportunity to increase throughput.
Cost Effectiveness / Improvement - The need to achieve cost improvement
targets determined by the Trust and the service preference to do this where
possible through income generation as opposed to loss of staff through
redundancy.

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1.4 Service Response

1.4.1 This Business Case and consequently the preferred and discounted options are established
on the basis of two main criteria:

1. Environmental, service improvement and flexibility
2. What happens if we don’t do it?

1.4.2 The Head of Specialised Mental Health and Learning Disability commissioning has
acknowledge the importance of the strategic relationship and are looking forward to working
with the Trust in the future.

1.4.3 The proposal is to also change the configuration of the beds. Currently three wards have bed
configurations of Pennine 16 beds (currently empty), Snowdon 15 beds, Helvellyn 15 beds.

1.4.4 The Full Business Case proposes that the current three wards are re-developed to
provide a more cost effective solution.

1.4.5 The requirement and possible need to market the services at the Unit has been identified in
the Forensic Division, and the Trust aims to produce a co-ordinated and integrated
marketing plan to run across all forensic secure services. One of the aims will be to
highlight and create clear links and pathways through the Division that will maximise bed
utilisation. As far as Arnold lodge is concerned it is expected that this new marketing impetus
will benefit the additional capacity at the Unit.

1.4.6 Analysis of the strategic environment at Full Business Case stage has confirmed that the
medium secure male mental illness stream is a core service provision for Nottinghamshire
Healthcare NHS Trust. As such the Trust have identified the risks and opportunities within
both Independent and Public Sectors and developed the Full Business Case along two
parallel strategies.

1.5 Option Appraisal

1.5.1 The Strategic Outline Case included six long listed options, 1 to 6 (see below), shortlisted
down to three (Options 4, 5 and 6). However, following the Finance & Performance
Committee on 18th October 2012, a review took place to review and clarify the options
available to determine whether there were any others available. Consequently, option 4a
was added, making 7 options in total.

1.5.2 Subsequent to this, the project team have drawn up a new set of benefits criteria aligning
more with the specific objectives of the Directorate placing greater emphasis around
environmental standards and patient benefit.

1.6 Listed Options and Related Implications to Site Plan

1.6.1 In addition to the non-financial appraisals, the comparative options are summarised in Fig B
showing the relative benefits / dis-benefits of each proposal, accompanied by supporting
General Arrangement layouts for clarity as follows:

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Fig B
Arnold Lodge Phase 3 – Listed Options Appraisal Comparator

o
Option Description of Works Estimate t ts s
o a
gniffa l sdeb era ya
eraC fo ledoM egatS 3dehsilpmoccA sdeB lanoitiddA emocnI lanoitiddA tnemnorivnE devorpmI ts dna ytiruces devorpmIycneiciffe deveihca PIC lanoitidda setadomoccAeninneP segrahC latipaC rewoL tnemhsibrufeR tnempolevedeR noisivorp noisulceS d ot noisnetxE draytruoC
Option 1 – Retain existing estate in current configuration and £170,000
Do Nothing condition
Pennine 0 beds – Snowdon & Helvellyn 15 beds each
Option 2 – Minor refurbishment to Snowdon & Helvellyn £1,770,000
Do Minimum Pennine 0 beds – Snowdon 15 beds – Helvellyn 15 2 Phases █ █
beds 34 Weeks
Option 3 – Minor refurbishment to Snowdon & Helvellyn and £2,010,000
Do Minimum Plus Demolition of Pennine 2 Phases █ █
Snowdon 15 beds – Helvellyn 15 beds 34 Weeks
Option 4 – Minor redevelopment of Pennine and Snowdon & £3,870,000
Redevelopment / Helvellyn & new build seclusion facility 2 Phases █ █ █ █
Refurbishment Pennine 15 beds – „Snowvellyn‟ - 15 beds 60 Weeks
Option 4a – Minor redevelopment of Pennine and Snowdon & £4,120,000
Redevelopment / Helvellyn & new build seclusion facility 3 Phases █ █ █ █ █ █ █ █
Refurbishment Pennine 20 beds – „Snowvellyn‟ - 20 beds 78 Weeks
Option 5 – Moderate redevelopment of Pennine and Snowdon £4,900,000
Redevelopment & Helvellyn with courtyard extensions & new build 3 Phases █ █ █ █ █ █ █ █ █ █ █
seclusion facility 78 Weeks
Pennine 20 beds – „Snowvellyn‟ - 20 beds
Option 6 – Re-build Demolition of Pennine, Snowden, Helvellyn ann £14,900,000
Cannock and replace with new build 1 Phase █ █ █ █ █
Two 10 bed wards with seclusion facility 92 Weeks

Note: 3 Stage model of care: 1. Acute Admission (with seclusion) 2. High Dependancy & Treatment (with seclusion) 3. Low Dependency and Rehabilitation

Page 8 of 84
Fig C
ARNOLD LODGE – Listed Options
OPTION 1 OPTION 2 OPTION 3
OPTION 4 OPTION 4a OPTION 5 OPTION 6
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1.7 Summary of Option Appraisal

1.7.1 The following summary identifies the relative benefits and dis-benefits of each option in terms
of the service led benefits criteria
Option 1 (do nothing), is not viable as it retains Pennine Ward as fallow, hence not
addressing the Trust „Safeguard Risk Management‟ Action Plan and leaves the current
wards Snowden and Helvellyn with many of the environmental limitations.
Option 2 (do minimum), does not provide the opportunity for any remodelling of the
space or r educe the oppressive overcrowding issue. Also, it does not provide for
additional beds.
Option 3 (do minimum with the demolition of Pennine) provides slight financial gain in
that it releases a small amount of capital charges and reduces backlog maintenance,
but again does not provide additional beds, staffing efficiencies or enable the delivery of
the three step model.

Options 4 and 4a do not address the significant improvement required to the internal
environment or provide for the staffing efficiencies through the remodelling of the
internal day spaces. Neither of these options therefore address the „U‟ shaped wards
which are difficult to observe and manage.

Option 5 (Refurbishment, remodelling and new build combination) establishes the
optimal opportunity for the key deliverables identified without re-building, includes the 3-
step clinical model, addresses environmental improvement, safety, staffing efficiency
and patient observation. This option does not reduce current bed numbers.

Option 6 (New Build) is discounted on economic grounds and also the fact that the
space available for a new build to current standards would lead to a potential net
reduction in beds as it would also require the sacrifice by demolition of Cannock Ward.

1.8 Preferred Option

1.8.1 Option 5 ranks in first place when combining the non-financial and financial appraisal scores.
It satisfies the criteria of enhancing the environment, enabling the new three step care model,
increasing patient therapeutic benefit, optimising safety for both patients and staff as well as
staff deployment, includes the ability to introduce night-time confinement, and includes a new
purpose built seclusion facility. In particular recent comments made at the last CQC visit
state “existing seclusion facilities currently based on Pennine ward fall well short of current
standards and expectations”.

1.8.2 Option 5 does not require additional nurse staffing for the existing patient occupancy as
despite the increased size of the wards, the alterations envisaged ease locking off of areas,
and combined with improved sight lines and access mitigates issues of scale.

1.8.3 For clarity, Fig D summarises the bed availability currently and then the changes to capacity
and commissioned beds should a) the preferred option be implemented and b) the available
beds be commissioned.

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